Protection of Employees (Fixed-Term Work) Bill 2003 [ Seanad Bill amended by the Dáil ] : Report and Final Stages.

Acting Chairman

This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 103, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. The only matters, therefore, which may be discussed are the amendments made by the Dáil. For the convenience of Senators, I have arranged for the printing and circulation of the amendments. As Members are aware, they may speak only once on Report Stage.

Question proposed: "That the Bill be received for final consideration."

Senators will recall that when this Bill was going through the House last month, my colleague, the Minister of State, Deputy Michael Ahern, undertook on my behalf to report back to the Seanad about any amendments made on Committee Stage in the Dáil. In that regard, I am pleased to update Senators today on developments in relation to the Bill. I appreciate the constructive discussion that took place in the Seanad as it was one of the better debates to have taken place in recent times. The fact that considerable changes and improvements have been made to the Bill as a result of the contributions of Senators is a tribute to them and an endorsement of this House's significant influence, which is often taken for granted.

Hear, hear.

The Committee Stage debate in the Dáil, which took place on the evening of 2 July, lasted for two hours. Some 43 amendments were discussed, eight of which were Government amendments. They were designed to improve the thrust of the Bill and I would briefly like to outline their effect to the House.

The Government put down two amendments to section 6, which deals with the conditions of the employment of fixed-term workers. Under the Protection of Employees (Part-Time Work) Act 2001, a part-time employee is prohibited from comparing himself or herself to a full-time employee for pension purposes if he or she works less than 20% of the hours of the full-time employee. There is a view, expressed by the Departments of Finance and Social and Family Affairs, that a part-time fixed-term employee could compare himself or herself to a full-time permanent employee, in which case it would be necessary to limit comparison regarding pensions to those who work at least 20% of the hours of their comparators, to be consistent with the Part Time Work Act 2001. The new section 6(5), as drafted by the Office of the Chief Parliamentary Counsel, provides for this point.

The new section 6(6) is subject to the new section 6(7) and is also in line with the Protection of Employees (Part-Time Work) Act 2001, under which protected employees are always comparing themselves to employees who work more hours than they do. In other words, thepro rata principle will become applicable in respect of pay or other conditions of employment that are dependent on hours worked. Section 6(8) provides, also for the avoidance of doubt, that Part III of the Organisation of Working Time Act 1997 relating to public holiday entitlements is not affected by the provisions of this Act. These amendments provide consistency between the part-time Act of 2001 and this Bill.

There were two Government amendments to section 7 of the Bill, which relates to objective grounds for less favourable treatment. The purpose of the first amendment in section 7(1) is to provide for greater clarity with regard to what constitutes objective grounds for the purposes of Part 2 of the Act. It adds an express provision in relation to renewing a fixed-term contract on a fixed-term basis only under section 9(4) of the Bill, to which I will refer later. This amendment had been sought by ICTU to provide for greater clarity.

The second amendment to section 7 inserted a new section 7(2) to cover situations where the terms of a fixed-term employee's contract of employment, taken as a whole in relation to conditions of employment, are at least as favourable as the terms of the comparable permanent employee's contract of employment. This provision was sought by the Department of Finance to provide flexibility to employers who might want to provide an attractive package of entitlements to attract certain employees to work on a fixed-term contract basis. This amendment is similar to a provision in the equivalent UK legislation on fixed-term work, the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002.

Section 9, which makes provision for successive fixed-term contracts, is a key section of the Bill and was the subject of detailed discussion in both Houses. Senators will recall that on Committee Stage in the Seanad on 10 June, Senator O'Toole tabled an amendment which would, in effect, have capped the total aggregate period of fixed-term contracts at four years. My colleague, the Minister of State, Deputy Michael Ahern, undertook to have this proposed amendment examined in detail and to report back to the Seanad if any Government amendment was accepted on Committee Stage by the Dáil. In this regard, I wish to inform Senators that my Department has been in detailed consultation with the Office of the Chief Parliamentary Counsel as well as with both ICTU and IBEC on this issue.

A number of Departments were consulted since the Bill was debated in this House. As a result of these discussions, the Office of the Chief Parliamentary Counsel drafted the revised text of section 9. I wish to outline for the benefit of the House the intent of the new text. Section 9(1) provides that, subject to subsection 9(4), where a fixed-term employee completes or has completed three years' continuous service with his or her employer or associated employer, that fixed-term contract may only be renewed once more by the employer, for a period of no longer than one year. When this Bill has been passed, existing employees on fixed-term contracts who complete or have completed three years' continuous service may have their contracts renewed only once more by their employer, for no longer than one year, following which the next renewal shall be deemed to be a contract of indefinite duration, in other words, a permanent contract.

Section 9(2) provides that, in the case of new fixed-term employees recruited after the passing of the Bill, a fixed-term employee is employed by his or her employer or associated employer on two or more continuous fixed-term contracts and the date of the first such contract is subsequent to the date on which this Act is passed, the aggregate duration of such contracts will not exceed four years. Section 9(3) provides that where any term of a fixed-term contract purports to contravene sections 9(1) or section or 9(2), that term shall have no effect and the contract concerned shall become by operation of law a contract of indefinite duration.

Section 9(4) provides that the above subsections shall not apply to the renewal of a contract of employment for a fixed-term where there are objective grounds justifying such a renewal. Section 9(5) provides that the First Schedule to the Minimum Notice and Terms of Employment Act 1973 relating to continuous employment will determine whether the employment referred to in sections 9(1) and 9(2) is continuous. This is a standard provision in employment rights legislation. The 1973 Act provides,inter alia, that dismissal followed by immediate re-employment will not break continuity of service.

The provision in section 9(4) is in line with the equivalent legislation in the UK, the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002. The regulations provide that, following a period of four or more years of continuous employment, the next renewal takes effect as a permanent contract, unless there are objective grounds justifying a further renewal. I acknowledge that ICTU has reservations about allowing for the renewal of a fixed-term contract after four years' continuous service on objective grounds.

I should stress that the Bill provides for fixed-term employees to take a complaint to the rights commissioner service of the Labour Relations Commission if they consider that the objective grounds given by the employer do not meet with the requirements of section 7. The various decisions that a rights commissioner can take in such circumstances are set out in section 14(2) of the Bill.

In the Dáil I was pressed to give examples of what might constitute such objective grounds. It would be wrong for me to try to do so as I would be pre-empting any cases that might arise in the future. What might be legitimate objective grounds in one case may not be so in another. The Office of the Parliamentary Counsel has advised that it would not be appropriate to draw up a list which could very quickly require updating in the light of case law.

As with all legislation, we are setting up a legal framework under which both fixed-term employees and employers must operate. The redress procedures in the Bill, namely, the rights commissioner service and the Labour Court, are in place for both parties to use if problems arise. Furthermore, the Government's amendment to section 13 of the Bill may prevent an employer from dismissing an employee – by not renewing a fixed-term contract – where the purpose is the avoiding of that employee becoming permanent. The new text substantially improves the provisions in section 9 of the Bill. I thank Senator O'Toole for his constructive amendment that essentially has led us to the text we now have.

Two Government amendments to section 13 of the Bill were agreed in the Dáil, the first of which related to the deletion of section 13(3) of the Bill as originally drafted. I was advised that this provision was not necessary but was included originally for the sole purpose of allaying fears that the Unfair Dismissals Acts had been affected in any way. However, a view was expressed by the ICTU that an impression could be given that the Unfair Dismissals Acts were in some way subject to section 9 and section 13(1) of the Bill. The provision was, therefore, deleted to prevent confusion or misapprehension arising.

The Government's second amendment to section 13 of the Bill – introducing a new subsection (d) – is a significant addition. The purpose of the amendment is to prohibit the dismissal of a fixed-term employee wholly or partly for the purpose of avoiding his or her contract being deemed to be one of indefinite duration under section 9(3). The text of the rest of section 13(1)(a), (b) and (c) is the same as in the text of the Bill passed by the Seanad. This amendment, by allowing an employee to take a complaint to a rights commissioner, aims at preventing an employer from dismissing a fixed-term employee by not renewing his or her contract in order, wholly or partly, to avoid that employee becoming permanent under a contract of indefinite duration under section 9(3) of the Bill. A minor textual amendment to section 19 of the Bill correcting a typing error was also adopted by the Dáil.

The Bill before us is a substantial improvement on the one initiated in this House last month. The improvement is very much down to the informed discussions that took place in this House in relation to section 9, in particular. The Bill now before the House provides a balanced framework under which employers and fixed-term workers can operate into the future.

Some 70,000 fixed-term workers will benefit under the Bill, many of them in the public sector whose conditions of employment will be improved, particularly in relation to pay and pension entitlements. I particularly refer to teachers and nurses, many of whom have been on fixed-term contracts for far too long. Members of these professions will now be in a position where a maximum of four years will apply to fixed-term contracts and, as a result of this legislation, they will then have to become permanent. This will be significant for those specific professions and others.

The Bill reflects the flexibility that employers want, on the one hand, and the security in relation to tenure that fixed-term employees want, on the other. I urge both employers and employees to use the legislation in a fair and pragmatic manner. Accordingly, I commend the Protection of Employees (Fixed-Term Work) Bill 2003, as passed by Dáil Éireann to the House.

I thank the Minister of State for the detail he has provided on the amendments made in the other House. I agree with him that they represent a substantial improvement on the Bill as initiated, which is to be welcomed. He highlighted the professions of nursing and teaching. In many professions there was excessive abuse of the fixed-term contract system. I welcome the Bill, particularly for the job security it now provides in its enhanced form and I am glad it provides the flexibility employers need.

My colleagues, Senators O'Toole, Leyden, White and McDowell, and I were all concerned with section 9 of the Bill. I welcome what the Minister of State has said about it and the necessary improvements that have been made. They were worthwhile. It is important that everything we do is thoroughly equitable. In so far as it has been possible, this has been provided for thanks to assiduous work by the Minister of State and his officials.

I compliment the Minister of State on this excellent Bill. Both he and the senior officials in attendance have put enormous work into this legislation, for which this House thanks them. Senators Coghlan, Tuffy and O'Toole, president of the ICTU, have worked on the Bill, for which I thank them. I also thank my colleague, Senator Hanafin, our spokesman on labour affairs, for the input he has made to the Bill which will soon become law. The fact that it was initiated here gives great credit to the House and the Leader, Senator O'Rourke. In introducing legislation here, the Leader has the confidence of all Ministers. This House has passed more legislation in the past year than in any previous year.

From my experience of coming to this House as a Minister of State, I always found the contributions of Members to be excellent; Senators really forged and fine-tuned Bills. There is much specialisation and knowledge in the House. Having only 60 Members, as opposed to 166 in the Dáil, everyone has a say, as is well noted by the relevant Minister. From my experience of bringing a Companies Act through this House, Paddy Kennedy, a Fine Gael spokesperson, made a tremendous input because of his knowledge of company law.

While the Bill is excellent, its contents must be notified to those affected. I suggest that this can be done through the Revenue Commissioners by providing a short explanatory leaflet to be distributed in Revenue communications. While it is fine having legislation, it is important that people know their rights. Information can be disseminated on websites but the best way to do it is through advertising in popular newspapers and getting the information to those affected. I thank the Minister of State and his officials, and the staff of the House, who have contributed so much to the Bill.

I thank the Minister of State for his report. I welcome the amendments, which improve the Bill. It is important and worthwhile legislation for the reasons outlined by the Minister of State and other Senators. My colleague, Senator McDowell, was involved in the deliberations on the Bill in this House. I commend the work done by the officials, the Minister and the Members of the House.

Question put and agreed to.
Question proposed: "That the Bill do now pass."

I thank Senators for their co-operation in finally passing the Bill. In response to Senator Leyden, we are preparing an information booklet. The details will be displayed on the departmental website and it will be available through the employment rights information unit in my Department. The information will be widely available.

The legislation gives new rights to employees across all sectors. It is long overdue, but better late than never. I thank the Members for their co-operation and their constructive contribution to the earlier Stages. I also thank my officials for their outstanding work on the Bill, especially in the past few weeks, when significant changes were made. Its provisions will cost the Exchequer an extra €50 million annually. In view of this, there was much consultation and discussion with the Attorney General and others, particularly the Department of Finance.

Question put and agreed to.